MASTER LETTER OF CREDIT
AGREEMENT
Dated as of
September , 200
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THIS MASTER
LETTER OF CREDIT AGREEMENT (this “Agreement”) is
issued by the undersigned applicant (the
“Applicant”) in favor of LaSalle Bank National
Association (together with its affiliates as set forth in
Section 11.8, the
“Bank”).
The Applicant
may from time to time request that the Bank issue letters of credit
for the account of the Applicant. The Applicant agrees that, except
as provided below, any such letter of credit shall be subject to
the terms and provisions of this Agreement, and the Applicant
further agrees with and for the benefit of the Bank as
follows:
SECTION 1
CERTAIN DEFINITIONS. When used herein the following terms shall
have the following meanings (such definitions to be applicable to
both the singular and plural forms of such terms):
Application means, at any time, an application (which shall
be in writing, including by facsimile, or made by electronic
transmission) for a letter of credit to be issued by the Bank,
specifying (a) the requested issuance date, the amount, the
beneficiary and the expiration date of such letter of credit,
(b) the documentary requirements for drawing thereunder and
(c) such other information as the Bank may reasonably
request.
Business
Day means any day on
which the Bank is open for commercial banking business at its
principal office in Chicago, Illinois.
Event of
Default means any of the
events described in Section 9.1.
Item means any draft, order, instrument, demand or
other document drawn or presented, or to be drawn or presented,
under any Letter of Credit.
ISP means at any time the most recent International
Standby Practices issued by the Institute for International Banking
Law & Practice, Inc.
Letter of
Credit means any letter
of credit issued (including any letter of credit issued prior to
the date hereof) by the Bank for the account of the Applicant
(including any letter of credit issued jointly for the account of
the Applicant and any other Person), in each case as amended or
otherwise modified from time to time, but excluding any letter of
credit that is issued pursuant to an Application which expressly
provides that such letter of credit is not issued pursuant to this
Agreement. A letter of credit issued by the Bank pursuant to an
Application from the Applicant (either individually or together
with any other Person) shall be a Letter of Credit hereunder even
if another Person is named as the “Applicant” or
“Account Party” in such letter of credit.
Liabilities means all obligations of the Applicant to the
Bank and its successors and assigns, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now
or hereafter existing or due or to become due, arising out of or in
connection with this Agreement, any Letter of Credit, any
Application or any instrument or document delivered in connection
herewith or therewith.
Person means any natural person, corporation,
partnership, trust, limited liability company, association,
governmental authority or unit, or any other entity, whether acting
in an individual, fiduciary or other capacity.
Prime
Rate means the rate per
annum established by the Bank from time to time as its “Prime
Rate” for commercial customers. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate
actually charged to any customer.
UCC means at any time the Uniform Commercial Code as
in effect in the State of Illinois.
UCP means at any time the most recent Uniform
Customs and Practice for Documentary Credits issued by the
International Chamber of Commerce.
Unmatured
Event of Default means
any event which if it continues uncured will, with lapse of time or
notice or both, constitute an Event of Default.
SECTION 2
LETTER OF CREDIT PROCEDURES.
2.1 Issuance
of Letters of Credit. Subject to the terms and conditions of
this Agreement, the Bank may from time to time, in its sole and
complete discretion, issue Letters of Credit for the account of the
Applicant; provided that the terms and provisions of each
Letter of Credit and the Application therefor shall be satisfactory
to the Bank in its discretion.
2.2
Applications. Not later than three Business Days prior to
the date of the proposed issuance of a Letter of Credit (or such
later date as the Bank shall agree), the Applicant shall deliver an
Application for such Letter of Credit to the Bank. An Application
may be sent by facsimile, by United States mail, by overnight
courier, by electronic transmission using the system provided by
the Bank, by personal delivery or by any other means acceptable to
the Bank.
2.3 Form of
Letters of Credit. (a) The Applicant authorizes the Bank
to set forth the terms of each Application in the Letter of Credit
corresponding to such Application (and in any amendment thereto) in
such language as the Bank deems appropriate, with such variations
from such terms as the Bank may in its discretion determine to be
necessary (which determination shall be conclusive) and not
materially inconsistent with such Application. The Bank may, but
shall not be obligated to, request the Applicant to review the form
of a Letter of Credit prior to issuance thereof, in which case the
Applicant shall be deemed to have approved the form of such Letter
of Credit. With respect to any other Letter of Credit, the
Applicant agrees that such Letter of Credit shall be conclusively
presumed to be in proper form unless the Applicant notifies the
Bank in writing of any inconsistency in such Letter of Credit
within three Business Days of its issuance. Upon receipt of timely
notice of any discrepancy in any Letter of Credit, the Bank will
endeavor to obtain the consent of the beneficiary and any
confirming bank for an appropriate modification to such Letter of
Credit; provided that the Bank shall have no liability or
responsibility for its failure to obtain such consent.
(b) The
Applicant accepts the risk that a Letter of Credit will be
interpreted or applied other than as intended by the Applicant to
the extent such Letter of Credit (i) permits presentation at a
place other than the place of issuance, (ii) permits
application of laws or practice rules with which the Applicant is
unfamiliar, (iii) includes ambiguous, inconsistent or
impossible requirements, (iv) requires termination or
reduction against a presentation made by the Applicant rather than
the beneficiary or (v) fails to incorporate appropriate letter
of credit practices rules.
2.4
Representations and Warranties. The delivery of each
Application shall automatically constitute a representation and
warranty by the Applicant to the Bank to the effect that on the
requested date of issuance of such Letter of Credit, (a) the
representations and warranties of the Applicant set forth in
Section 4 shall be true and correct as of such
requested date as though made on the date thereof and (b) no
Event of Default or Unmatured Event of Default shall have then
occurred and be continuing or will result from such
issuance.
SECTION 3
REIMBURSEMENT OBLIGATIONS; RESPONSIBILITIES, ETC.
3.1
Reimbursement Obligations. The Applicant hereby agrees to
reimburse the Bank forthwith upon demand in an amount equal to any
payment or disbursement made by the Bank under any Letter of Credit
or any time draft issued pursuant thereto, together with interest
on the amount so paid or disbursed by the Bank from and including
the date of payment or disbursement to but not including the date
the Bank is reimbursed by the Applicant at a rate per annum
equal to the Prime Rate from time to time in effect plus 2% (or, if
less, the maximum rate permitted by applicable law). The obligation
of the Applicant to reimburse the Bank under this
Section 3 for payments and disbursements made by the
Bank under any Letter of Credit or any time draft issued pursuant
thereto shall be absolute and unconditional under any and all
circumstances, including, without limitation, the
following:
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(a)
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any
failure of any Item presented under such Letter of Credit to
strictly comply with the terms of such Letter of Credit;
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(b)
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the
legality, validity, regularity or enforceability of such Letter of
Credit or of any Item presented thereunder;
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(c)
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any
defense based on the identity of the transferee of such Letter of
Credit or the sufficiency of the transfer if such Letter of Credit
is transferable;
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(d)
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the
existence of any claim, set-off, defense or other right that the
Applicant may have at any time against any beneficiary or
transferee of such Letter of Credit, the Bank or any other Person,
whether in connection with this Agreement, the transactions
contemplated hereby or any unrelated transaction;
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(e)
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any
Item presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
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(f)
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honor of a demand for payment
presented electronically even if such Letter of Credit requires
that demand be in the form of a draft;
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(g)
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waiver by the Bank of any
requirement that exists for the Bank’s protection and not the
protection of the Applicant or any waiver by the Bank which does
not in fact materially prejudice the Applicant;
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(h)
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any
payment made by the Bank in respect of an Item presented after the
date specified as the expiration date of, or the date by which
documents must be received under, such Letter of Credit if payment
after such date is authorized by the ISP, the UCC or the UCP, as
applicable; or
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(i)
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any
other circumstance or happening whatsoever, whether or not similar
to any of the foregoing;
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provided that the Applicant shall not be obligated to
reimburse the Bank for any wrongful payment or disbursement made by
the Bank under any Letter of Credit as a result of any act or
omission constituting gross negligence or willful misconduct on the
part of the Bank.
3.2
Discrepancies. (a) The Applicant agrees that it will
promptly examine any and all instruments and documents delivered to
it from time to time in connection with any Letter of Credit, and
if the Applicant has any claim of non-compliance with its
instructions or of discrepancies or other irregularity, the
Applicant will immediately (and, in any event, within three
Business Days) notify the Bank thereof in writing, and the
Applicant shall be deemed to have waived any claim against the Bank
unless such notice is given within such time period. Without
limiting the foregoing, if the Bank makes any payment or
disbursement under a Letter of Credit and the Applicant does not
send a notice to the Bank within three Business Days objecting to
such payment or disbursement and specifying in reasonable detail
the discrepancy or irregularity which is the basis for such
objection, then the Applicant shall be precluded from making any
objection to the Bank’s honor of the presentation with
respect to which such payment or disbursement was made (but shall
not be precluded from asserting any objection to any different
presentation under the same or a different Letter of
Credit).
(b) The
Applicant’s acceptance or retention of any documents
presented under or in connection with a Letter of Credit (including
originals or copies of documents sent directly to the Applicant) or
of any property for which payment is supported by a Letter of
Credit shall ratify the Bank’s honor of the documents and
absolutely preclude the Applicant from raising a defense or claim
with respect to the Bank’s honor of the relevant
presentation.
3.3
Documents. Unless specified to the contrary in the relevant
Application, the Applicant agrees that the Bank and its
correspondents: (a) may accept as complying with the
applicable Letter of Credit any Item drawn, issued or presented
under such Letter of Credit which is issued or purportedly issued
by an agent, executor, trustee in bankruptcy, receiver or other
representative of the party identified in such Letter of Credit as
the party permitted to draw, issue or present such Item; and
(b) may in its or their discretion, but shall not be obligated
to, accept or honor (i) any Item which substantially complies
with the terms of the applicable Letter of Credit; (ii) any Item
which substantially complies under the laws, rules, regulations and
general banking or trade customs and usages of the place of
presentation, negotiation or payment; (iii) drafts which fail
to bear any or adequate reference to the applicable Letter of
Credit; (iv) any Item presented to the Bank after the stated
expiration date of a Letter of Credit but within any applicable
time period during which such Letter of Credit may be honored in
accordance with the UCP, the UCC and/or the ISP, as applicable
(and, in any event, any Item presented to the Bank on the Business
Day immediately following the stated expiration date of any Letter
of Credit, if such stated expiration date falls on a day which is
not a Business Day); or (v) any Item which substantially
complies with the requirements of the UCP, the UCC and/or the ISP,
as applicable. In determining whether to pay under any Letter of
Credit, the Bank shall have no obligation to the Applicant or any
other Person except to confirm that the Items required to be
delivered under such Letter of Credit appear to have been delivered
and appear on their face to substantially comply with the
requirements of such Letter of Credit. For purposes of the
foregoing, an Item “substantially complies” unless
there are discrepancies in the presentation which appear to be
substantial and which reflect corresponding defects in the
beneficiary’s performance in the underlying transaction. A
discrepancy is not substantial if it is unrelated or immaterial to
the nature or amount of the Applicant’s loss. For example,
documents honored by the Bank that do not comply with the timing
requirements of the Letter of Credit for presenting or dating any
required beneficiary statement nonetheless substantially comply if
those timing requirements are not material in determining whether
the underlying agreement has been substantially performed or
violated.
3.4
Exculpation. In addition to the exculpatory provisions
contained in the UCP, the UCC and/or the ISP, as applicable, the
Bank and its correspondents shall not be responsible for, and the
Applicant’s obligation to reimburse the Bank shall not be
affected by, (a) compliance with any law, custom or regulation
in effect in the country of issuance, presentation, negotiation or
payment of any Letter of Credit, (b) any refusal by the Bank
to honor any Item because of an applicable law, regulation or
ruling of any governmental agency, whether now or hereafter in
effect, (c) any action or inaction required or permitted under
the UCC, the UCP, the ISP or the United Nations Convention on
Independent Guarantees and Stand-by Letters of Credit, in each case
as applicable, or (d) any act or the failure to act of any
agent or correspondent of the Bank, including, without limitation,
failure of any such agent or correspondent to pay any Item because
of any law, decree, regulation, ruling or interpretation of any
governmental agency.
3.5 Risks. The
Applicant assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit (it being
understood that such assumption is not intended to, and shall not,
preclude the Applicant from pursuing any right or remedy it may
have against any such beneficiary or transferee). The Applicant
further agrees that any action or omission by the Bank under or in
connection with any Letter of Credit or any related Item, document
or property shall, unless in breach of good faith, be binding on
the Applicant and shall not put the Bank under any resulting
liability to the Applicant. Without limiting the foregoing, the
Applicant agrees that in no event shall the Bank be liable for
incidental, consequential, punitive, exemplary or special
damages.
3.6
Limitation on Bank’s Obligations. Without limiting any
other provision herein, the Bank is expressly authorized and
directed to honor any request for payment which is made under and
in compliance with the terms of any Letter of Credit without regard
to, and without any duty on the part of the Bank to inquire into,
the existence of any dispute or controversy between any of the
Applicant, the beneficiary of any Letter of Credit or any other
Person, or the respective rights, duties or liabilities of any of
them, or whether any facts represented in any Item presented under
a Letter of Credit are true or correct. Furthermore, the Applicant
agrees that the Bank’s obligation to the Applicant shall be
limited to honoring requests for payment made under and in
compliance with the terms of any Letter of Credit, and the
Bank’s obligation remains so limited even if the Bank may
have prepared or assisted in the preparation of the wording of any
Letter of Credit or any Item required to be presented thereunder or
the Bank may otherwise be aware of the underlying transaction
giving rise to any Letter of Credit.
3.7
Automatic Renewal of Letters of Credit. IF ANY LETTER OF
CREDIT CONTAINS ANY PROVISION FOR AUTOMATIC RENEWAL, THE APPLICANT
ACKNOWLEDGES AND AGREES THAT THE BANK IS UNDER NO OBLIGATION TO
ALLOW SUCH RENEWAL TO OCCUR AND ANY SUCH RENEWAL SHALL REMAIN
WITHIN THE SOLE AND ABSOLUTE DISCRETION OF THE BANK. THE APPLICANT
IRREVOCABLY CONSENTS TO THE AUTOMATIC RENEWAL OF EACH SUCH LETTER
OF CREDIT IN ACCORDANCE WITH ITS TERMS IF THE BANK ALLOWS SUCH
RENEWAL TO OCCUR; PROVIDED THAT THE APPLICANT SHALL HAVE THE
RIGHT TO REQUEST THE BANK TO DISALLOW ANY SUCH RENEWAL ON THE
CONDITION THAT THE APPLICANT SHALL GIVE THE BANK PRIOR
WRITTEN
NOTICE OF SUCH
REQUEST NOT LESS THAN 30 DAYS PRIOR TO THE DEADLINE IMPOSED UPON
THE BANK FOR NOTIFICATION TO THE BENEFICIARY OF NON-RENEWAL OF ANY
SUCH LETTER OF CREDIT.
SECTION 4
REPRESENTATIONS AND WARRANTIES. The Applicant represents and
warrants to the Bank that:
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(a)
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Organization, etc.
The Applicant is duly
organized or formed, validly existing and (to the extent applicable
under the laws of the relevant jurisdiction) in good standing under
the laws of the jurisdiction of its organization or formation, and
the Applicant is duly qualified and in good standing as a foreign
entity authorized to do business in each other jurisdiction where,
because of the nature of its activities or properties, such
qualification is required.
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(b)
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Authorization; No
Conflict. The
execution and delivery by the Applicant of this Agreement and each
Application, the issuance of Letters of Credit for the account of
the Applicant hereunder and the performance by the Applicant of its
obligations under this Agreement and the Applications are within
the organizational powers of the Applicant, have been duly
authorized by all necessary organizational action, have received
all necessary governmental approval (if any shall be required), and
do not and will not contravene or conflict with, or result in or
require the imposition of any lien or security interest under, any
provision of law or of the charter or by-laws of the Applicant or
of any indenture, loan agreement or other contract, or any
judgment, order or decree, which is binding upon the
Applicant.
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(c)
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Validity and Binding
Nature. This
Agreement is, and upon delivery to the Bank each Application will
be, the legal, valid and binding obligation of the Applicant,
enforceable against the Applicant in accordance with its terms,
subject to bankruptcy, insolvency and similar laws of general
application affecting the rights of creditors and to general
principles of equity.
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(d)
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Approvals. No authorization, approval or
consent of, or notice to or filing with, any governmental or
regulatory authority is required to be made in connection with the
execution and delivery by the Applicant of this Agreement or the
issuance of any Letter of Credit for the account of the Applicant
p
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